Sep 2, 2017

Posted by in Business, LEGAL and LAW, NEWS | 0 Comments

Student Debt Rising

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MDC researched and discovered, The Consumer Federation of America (CFA) released a study Tuesday that found that millions of people had not made a payment on $137 billion in federal student loans for at least nine months in 2016, a 14 percent increase in defaults from a year earlier. The consumer watchdog used the latest data from the Education Department, which manages $1.3 trillion in federal student debt owed by 42.4 million Americans. Failing to repay student loans has all sorts of terrible consequences, but in some states, more than just your financial well-being is at risk — student loan default could cost you your professional certification or even your driver’s license.

MDC highlights some career paths that could incur problems . Some states suspend licenses needed to practice in certain fields, from health care to cosmetology, though license suspension can extend to driving, too.

Repeal advocates argue that license suspension is a counterintuitive punishment for student loan defaulters, because it may keep them from working, which theoretically enables them to repay their debts.

According to a list from the National Consumer Law Center, 22 states have laws that enable suspension of state licenses issued to student loan defaulters. The professions and licenses affected by suspensions vary by state and cover a wide range of earning potential, but some of them include doctors, social workers, barbers, transportation professionals and lawyers — the lists can be quite extensive. If your state is on the list and you’re at risk of defaulting, you might want to research the details:

Alabama
Alaska
California
Florida
Georgia
Hawaii
Illinois
Iowa
Kentucky
Louisiana
Massachusetts
Minnesota
Mississippi
Montana
New Jersey
New Mexico
North Dakota
Oklahoma
Tennessee
Texas
Virginia
Washington

Student loan default trashes your credit, and the loans continue to incur interest and fees as long as they remain unpaid, so getting out of default can be very challenging. If you have federal student loans, as most people who borrow do, there are many options available to you before you’re 270 days past due on your student loan payments (that’s the definition of default): You can apply for income-based repayment or pay-as-you-earn programs, in addition to applying for an extended repayment period, which will raise the cost of your loans in the long run but make them more affordable now.

If you want to see how your student loans are affecting your credit, You can check your credit reports for free once a year from each of the three major credit reporting agencies at AnnualCreditReport.com. Because student loans are generally not dischargeable in bankruptcy and default can be catastrophic for your credit, it’s crucial to prioritize making your loan payments on time.

 

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